High prospects for Uruguay’s legal marijuana business

The South American nation will be able tap into the tight market for medical marijuana,
as an increasing number of countries legalize its use

By Malena Castaldi and Felipe Llambias / Reuters, MONTEVIDEO

Marijuana activist and indoor grower Juan Vaz, head of the Uruguayan Cannabis Studies Association, poses in his indoor garden in Montevideo on Dec. 6.Warning: Smoking can damage your health

Photo: Reuters

Uruguay’s pioneering move to legalize the planting and sale of marijuana opens the door for a clandestine cottage industry of pot growers to transform into a legitimate business that could even export medical cannabis, a commodity in short supply.

More and more countries are setting up medical marijuana programs to help relieve the pain of terminally ill patients and treat other health conditions, but there are few legal sources of the drug in the world and Uruguay could tap that tight market.

Uruguay’s domestic marijuana output is expected to expand rapidly under a law that cleared the congress on Tuesday allowing its citizens to grow up to six plants a year in their homes and more in smoking collectives.

Many have been doing this secretly for years. Smoking marijuana — and indeed the private consumption of all drugs — has not been a crime in Uruguay since 1974, but the small South American nation of 3.3 million people is now the world’s first to fully regulate marijuana from cultivation to consumption.

When the law is implemented in 120 days, Uruguayans will be able to buy 40g a month over the counter at pharmacies licensed by the state, which will fix the price, tax the trade and issue permits for larger producers.

“The big difference is that we are no longer outlaws,” said Alvaro Calistro, who has grown pot in his Montevideo backyard for 20 years. “This allows us to increase the scale of cultivation.”

Calistro expects a rise of licensed entrepreneurs growing marijuana on small farms outside the city, though who will get permits to grow the drug for sale in pharmacies has yet to be specified in regulations the government is to draw up by April.

Licensed medical marijuana for export would have to be grown in greenhouses to pharmaceutical and security standards required by the health authorities of importing nations.

“A whole new spectrum of opportunities opens up,” said Juan Vaz, head of the Uruguayan Cannabis Studies Association, which campaigned for legalization. “It’s the end of the hypocrisy of prohibitionist policies that failed to combat drug trafficking.”

Vaz, who has smoked marijuana for 30 years and does research on the genetics of the plant, said legal cultivation would provide good quality pot at a price that will put the criminals out of business.

“The difference between homegrown and illegal pot is like that between a good wine and plonk,” he said.

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Uruguay’s government plans to fix the price of marijuana sold in pharmacies at US$1 a gram, which is roughly enough to roll two joints, Vaz said.

With costs estimated at between US$0.20 and US$0.50, the official price should provide growers a tidy margin and undercut the black market price for marijuana, which is mostly smuggled in from Paraguay and peddled at about US$1.40 a gram on average.

Uruguayan President Jose Mujica, a 78-year-old former guerrilla fighter, has recognized that legalization is an experiment and says it will be reversed if it backfires.

Critics say it will increase marijuana use, lead to abuse with harder drugs and attract pot smokers from the world over looking to pick up the drug at Uruguayan pharmacies. To prevent that, the marijuana sales will be restricted to adult residents of Uruguay who must be registered as users on a government data base.

The immediate impact, most experts agree, will be to reduce the smuggling of Paraguayan marijuana into Uruguay, often thrown in bundles from planes or stashed in the fuel tanks of trucks.